Personal, unsecured loans issued through online lenders like Best Egg, LendingClub and Upstart have long been seen as particularly vulnerable in a downturn.
But new figures from data-crunching firm dvo1 are pointing to some surprising resilience in marketplace loans, a lending category widely considered to be high-risk.
After hitting a high of 16.5 percent in April as the coronavirus lockdown took hold, the impairment rate for marketplace loans – which measures the frequency of borrowers falling behind or entering into forbearance agreements with lenders – has fallen to 9.7 percent.
Particularly impressive has been the fact that the drop has occurred even with the expiration of expanded unemployment benefits of $600 a week at the end of July amid a deadlock in Congress over a new coronavirus relief package.
Initial jobless claims were 1.2 million as of Aug. 6, or five times the historical average.
“Despite the elevated jobless claims and lack of additional unemployment stimulus, online loan performance remains stronger than it has been historically and continues its upward trajectory,” notes the COVID-19 Performance Report by dvo1.
Nor is it a case where loan payments for August simply haven’t come due yet. With payments on these online loans typically due at the beginning of the month, more than 50 percent of borrowers had already paid up for August by the time the report was released, New York-based dvo1 noted.
Loan modifications, after soaring as COVID-19 hit the United States this spring, have also shrunk dramatically, falling to roughly 5 percent of their pace in March.
Overall, 70 percent of all borrowers who won loan modifications from lenders after COVID-19 hit have resumed paying.
As of June, there were more than 100 million skipped payments by consumers on a range of loans including student and auto loans, a number that tripled from April.
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